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“V” Is for Valuation – Divorce and Valuation of Assets

V is for Valuation.

Valuation of assets is often an extremely important part of divorce. When parties acquire property during a marriage, the Court is tasked with equitably distributing that property upon entry of a divorce. In order to determine an equitable result in a settlement, attorneys often need to determine the present value of those various pieces of property.

This issue is most prevalent in a cases in which a spouse has an ownership interest in a business or partnership. In such cases, often one or more expert accountants will need to review the books and records of the business and assist the attorneys in understanding what the business is worth. Business valuations are very complex and will be addressed in more detail through an upcoming blog series.

Other major assets in divorce that require valuations include the marital residence (or other real property) and pensions.

In some cases with a house, the parties simply decide to sell the house and equitably distribute the proceeds from the sale. If sold, the house is valued simply by placing it on the market. If a party wants to keep a house, however, then the parties must agree upon a present value for that property. This is often addressed by the parties utilizing a joint real-estate appraiser to set that value. Once the value of the house is agreed-upon by the parties, it is offset against any mortgages on the property and sometimes other liabilities related to the property. The parties and their attorneys can then negotiate one party’s “buy-out” of the other party’s interest in the property.

If a pension is accumulated during a marriage it will be considered marital property subject to equitable distribution, even though it is in one party’s name. Dissimilar 401(k)s or IRAs, pensions are income streams in a set amount per month that begin to be paid upon someone’s retirement. In a divorce case, one or both parties may be interested in buying out the other party’s interest in a pension. While there is no place to look up the present value of a pension on a given day, it is possible for parties to present value one or more pensions. Attorneys will use resources or third parties specializing in appraising pensions to determine a pension’s present value. Once valued, just like a house or any other asset, a pension can be more easily traded-off with other assets in an overall equitable distribution plan.

There can be various valuation issues that arise in a divorce case. Just like a business, houses and pensions, other assets like automobiles, expensive collections or personal property (shoes, purses, collectibles, memorabilia, coins, jewelry, etc.) may all present particular valuation issues in a divorce case. The attorneys at Ulrichsen Rosen & Freed LLC will carefully consider if these issues exist in your case. We will be able to recommend reasonable ways to streamline a process to value assets, offset values, and help you determine an equitable distribution plan that makes sense for your case.